The UK government has finalized a new subsidy agreement with Drax power station, aimed at improving sustainability and reducing excessive profits previously afforded. This agreement, running from 2027 to 2031, will see Drax primarily serve as a back-up for renewable sources like wind and solar. A clawback mechanism is introduced to prevent profit surges during high electricity prices. Drax promises a 'net saving' for consumers, estimating annual costs cuts between £1.6 billion and £3.1 billion, while ensuring all wood pellets used are sustainably sourced and not from primary forests.
The new subsidy agreement for Drax power station will run from 2027 to 2031 and aims to halve the amount of subsidies received when wind and solar power are abundant.
The previous subsidy arrangement allowed Drax to make 'unacceptably large profits,' but the new deal introduces a 'clawback mechanism' to prevent excessive profits amid rising electricity prices.
A statement from Drax suggests that the new subsidy arrangement will cut electricity system costs by between £1.6 billion and £3.1 billion annually, creating a 'net saving' for consumers.
Moving towards sustainable sourcing, the new agreement mandates that 100% of the wood pellets burned must be sustainably sourced and prohibits support payments for materials from primary and old growth forests.
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